Service Tax Credit on Loan Processing Charges

[akhilesh shrivastava]

Dear Sir/Madam,

My query is as under :

How to claim service tax credit on Loan processing charges? Whereas bank is not giving any service tax bifurcation in it's statement. Than what should we do? Which option is best for us: First prepare a statement in which service tax portion separated from bank charges and submit it to the bank for its confirmation or Second only bank statement is sufficient to take ST claim .

Further, can we take service tax credit on bank charges related to the fy 2013 in the current period. What is the rule in this regard. Pl advise.

With Thanks,

[KASTURI SETHI]

Sh.Akhilesh Shrivastava,

As per Rule 4(7) of Cenvat Credit Rules, 2004 as amended vide Notification No.6/15-CE(NT) dated 1.3.15 credit can be taken within one year from the date of issue of invoice. Hence you cannot take credit for the Service Tax paid on loan processing charges paid during the year 2013. First option is better. The statement indicating break-up of Service Charges and Service Tax should be certified by the Bank. In case Bank refuses to certify, then get it certified from either C.A. or Cost Accountant. There is no logic to forego Cenvat Credit (which is your substantive right) in the absence of break-up.The department accepts the certification from C.A. or Cost Accountant.

[Ganeshan Kalyani]

On special request some Banks do provide us the statement with bifurcation of bank charges and applicable service tax on the same. You may try for that. But as said by Sri Kasturi Sir the time limit as prescribed for taking cenvat credit is elapsed the said credit becomes ineligible. But in future for such transactions you may implement this suggestion. Thanks.

[KASTURI SETHI]

Thank u Sir for endorsing my views.

[DR.MARIAPPAN GOVINDARAJAN]

You cannot take credit due to the time limitation to take credit. There is no provision for delay condonation.

[akhilesh shrivastava]

Thank you Kasturi ji,

Your advise is fruitful but as you have written in your statement that "One year from the date of issue of invoice" means one year from the date of bank statement or one year from the date of letter submitted by us to the bank for it's confirmation. Kindly suggest.

Regards

[Ganeshan Kalyani]

As per my understanding the date of statement issued by the bank would be the date of invoice. As you may submit the letter for confirmation at your requisite time which cannot be assumed as date of invoice. It is better if you speak with your banker to issue statement in the way it is required for claiming input service tax credit. Thanks.

[DR.MARIAPPAN GOVINDARAJAN]

The calculation of one year limitation is to be done from the date of bank statement, in my view.

[KASTURI SETHI]

Sh.Akhilesh Shrivastava Ji,

I agree with the views (both dated 22.2.16) of both experts, namely, Sh.Ganeshan Kalyani, Sir and Sh.MARIAPPAN GOVINDARAJAN, Sir.

[Ganeshan Kalyani]

Thanks Sri Kasturi Sir for validating my views. Thanks a ton to you Sir.

AI Summary

Claiming Service Tax Credit on 2013 Loan Processing Fees Not Possible Due to Rule 4(7) One-Year Limit. A participant in a discussion forum inquired about claiming service tax credit on loan processing charges when banks do not provide a service tax breakdown. The consensus among respondents was that credit for service tax paid in 2013 cannot be claimed due to a one-year limitation per Rule 4(7) of the Cenvat Credit Rules, 2004. It was advised to prepare a statement separating service tax from bank charges and have it certified by the bank or a Chartered Accountant. Future transactions should ensure such documentation is obtained promptly to claim credits within the allowable period.